Data from LMC Automotive suggests that China's car market enjoyed a strong surge at the end of the year as government incentives caused a spike in demand.

LMC said that China's light vehicle market performed at a level that "exceeded our previous expectations, with sales of locally-made models totalling 2.43m units, marking an impressive 21.5% rise on last year". LMC's analysis suggested that the passenger vehicle SAAR climbed to 25.49m units during November, the highest level seen since January 2014.

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LMC said strong sales in the passenger vehicle market benefitted local producers in particular, with sales of locally-made models in November reaching a 23-month peak at 2.11m units, up by 24.8% year-on-year.

According to the China Passenger Car Association (CPCA), the Inventory Alert Index rose by 7.7% in November compared to October. It is standard practice in China for vehicle manufacturers to increase production volumes at the end of the calendar year, which inevitably results in high inventory levels for dealers. Stocks are built up in preparation for the spike in demand during the Spring Festival, thereby offsetting any risk to dealers from the current high stock levels.

November's results are a further reflection of the success of the government's incentives, LMC said. Based on the latest CPCA data, sales of vehicles fitted with engines of 1.6 litres (which have seen a 10% tax cut) or less reached 1.56m units, a rise of 16.5% on the preceding month and equivalent to a 70.9% share of total passenger vehicle sales.

LMC said that looking further ahead, sales of vehicles equipped with such engines will continue to perform well in the coming months, until the policy expires (at the end of 2016).

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The SUV segment's momentum continued unabated during November, with 714,000 units sold, marking a considerable 49.8% YoY rise, while, in contrast, sales of sedans/hatchbacks reached 1.18m units, a mere 100,000 units more than during the same period last year.

Sales of Chinese-branded SUVs accounted for over 54% of total SUV sales in November, with YoY growth in excess of 80%. LMC noted that local brands have been supported largely by new model activity, with the majority of new models being well received in the market. The Haval H6, the Baojun 560, and the Trumpchi GS4 ranked as China's top three bestselling SUV models during November.

Analysts say that it is likely December also turned in strong sales in China.